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The uncapping of student numbers was one of those rare moments when the government sprang a genuine and potentially game-changing surprise on universities.

The initial question was how we would pay for it, given the high write-off rate forecast for existing student loans. For many, that question still hasn’t been answered.

But David Willetts, the former universities minister, remains bullish about the financial picture. Speaking last month at a seminar organised by the Higher Education Policy Institute, he admitted that it was “more in hope than expectation” that he proposed lifting the cap to the Treasury in 2013. “But I remember the chancellor saying to me that when they did the Treasury assessment of the economic return to all the different candidate measures [being considered] for the Autumn Statement, higher student numbers had the biggest long-term economic benefit.”

Universities are being charged ‘twice as much’ by Google to advertise to students after the uncapping of numbers

Willetts also argued that, somewhat counter-intuitively, the financial return was a reason for retaining a fees cap: “That’s actually why you have enormous fee escalation in the US,” he said. “Because when the returns are so substantial, providers can get away with very high fees, which they then spend on the second baseball pitch. That’s one of the reasons we need to retain some sort of price control here, and it’s also evidence, I believe, that the number of students is still too low, because you would otherwise get to a point where the marginal returns would be much less.”

Whether there will, in fact, be a very significant surge in student numbers is open to doubt; the demographics are against it, and of the 30,000 additional places made available this year, only about 14,000 were taken up. But there is no doubt that the policy change will increase competition between institutions.

This year, 15 universities increased their intake by more than 400 students. Some have grown by almost 50 per cent since 2012. Such increases show that selective universities are fishing in pools previously protected for others, which ramps up the pressure to attract applicants across the sector.

According to Carl Lygo, vice-chancellor of BPP University (who was also speaking at the Hepi event), universities are being charged “twice as much” by Google to advertise to students after the uncapping of numbers – clear evidence, he said, that “the market is getting more and more intense”.

The question is how this helps students. If more have the opportunity to go to university, then that is clearly a positive, as is greater choice about where to study. But students won’t be well served if competition feeds through into an excessive focus on marketing glitter over educational substance; if the unit of resource is squeezed as numbers grow; or if – as is suggested in our news pages this week – staff workloads increase significantly in response to expansion or commercial pressures.

This week we publish the results of our annual student experience survey, and the strength of our universities is clear. The challenge is to retain and develop those strengths in a changing context. And as one vice-chancellor comments, in an age of uncapped student numbers, that means thinking hard about the size and shape of your institution, and avoiding expansion for expansion’s sake.